Acacia Mining and Tanzania agree to talks over taxes and exports

Acacia Mining and Tanzania have agreed to talks to try to settle a festering dispute over taxes, royalties and exports, sending shares in the gold mining company higher.

London-listed shares in Acacia, which is majority owned by Canada’s Barrick Gold Corp., jumped as much as 11 per cent to 303 pence and were 7.7 per cent higher at 1436 GMT, outpacing sector rivals.

Acacia’s market value has nearly halved to about US$1.4 billion since Tanzania banned the export of unprocessed ore in March, part of a push for the construction of a local smelter to make the country’s gold exports more valuable.

In a memo to employees dated June 13 rejecting Tanzania’s claims, Acacia Chief Executive Officer Brad Gordon said the firm’s “very existence” had been jeopardized by the accusations.

The agreement to hold talks was reached after a meeting between Tanzanian President John Magufuli and Barrick Gold Chairman John Thornton, a statement from Magufuli’s office said.

“The company is ready to hold talks with the government of Tanzania over the payment of compensation of losses incurred by Tanzania from the company’s operations in the country,” the statement said.

It also said Thornton had agreed to cooperate with Tanzania to build a smelter in the country.

Acacia has been accused of evading taxes, under-declaring gold exports, failing to report some metals and operating in the country without a certificate of registration.

Thornton said he was optimistic a resolution would be reached and that a company team and representatives from the government would go through the details.

“I have assured the president that we are very interested in sitting down and reaching a resolution which is a win-win. A win for Tanzania, a win for Barrick and a win for our subsidiary company, Acacia,” he told reporters after the meeting.

A statement from Barrick said the ban on exports of unprocessed ore had been discussed.

Magufuli wants to reform the country’s mining industry, an important source of foreign exchange, and has launched audits of the sector, which accounts for 4 percent of Tanzania’s gross domestic product.

A government audit of Acacia found it had 10 times more gold in containers prepared for export than it had declared and that the concentrates included a number of undeclared minerals.

“We have never stolen, we have never evaded taxes, we have never forged documents to avoid paying royalties and we have never been unlawful,” Gordon said in the internal memo.